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Pall Corp. said it will restate some or all of its annual and quarterly financial reports for the fiscal years 1999 through 2006, and for the first three quarters of the current fiscal year. The adjustment is being made to correct the company’s previously announced understatement of U.S. income tax payments and of its provision for income taxes. The amount of the understatement has not yet been determined, but the company said that the revisions would be material.

In a regulatory filing, Pall explained that the restatement relates to the taxation of certain inter-company payable balances that mainly resulted from sales of products from one of its foreign subsidiary to a U.S. subsidiary. Under the Internal Revenue Code, the unpaid balances may have given rise to “deemed dividend income” that was not properly taken into account on the company’s U.S. income tax return and provision for income taxes.

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The affect on financial statements will vary from period to period, depending on, among other factors, the size of the inter-company payable balances at the end of the fiscal quarters in question. Pall officials did concede that taxes payable could exceed $130 million, excluding interest and penalties assessed by the IRS.

“We are working diligently with the Audit Committee and our auditors to resolve this matter,” said Eric Krasnoff, Pall’s Chairman and CEO. Earlier this month, Pall warned that it was investigating the possibility it materially understated U.S. income tax payments. At the time it had notified the IRS and Securities and Exchange Commission of the tax matter and of the audit committee’s pending inquiry.

Pall also noted that the issue may have resulted in the company’s failure to comply with certain terms of its debt or other agreements. As a result, it may need to seek waivers from creditors under those agreements, which could affect its “intention” to declare a quarterly dividend for the quarter ending July 31, 2007.